Prospective homebuyers can get encouraged by the current market. Nearly 68 percent of homes sales today are to individual buyers compared to 53 percent in 2011 when investor and cash deals were at their peak. Still, competition for housing is hot.
“In a competitive market, your offer may be one of many. But you can take steps to increase your chances of success,” said Chris Bowden, senior vice president of HomeSteps, the real estate sales division of Freddie Mac.
The experts at HomeSteps and Bowden are offering homebuyers five important tips for making an offer in today’s market:
• Understand your finances. While it’s not nearly as fun as house hunting, fully understanding your finances is critical to helping you determine your price limit and whether your budget can cover necessary upgrades, as well as monthly expenses for general upkeep and utilities, which can run hundreds of dollars monthly.
• Act fast. When home inventory is low, the sooner you can make an offer, the better. Get pre-approved if you know you’ll need a mortgage to buy. It will help you act fast and make a confident offer.
• Make a solid offer. A strong offer will be comparable with other sales and listings in the neighborhood. A licensed real estate agent who is active in the neighborhoods you’re considering will be instrumental in helping you put in a solid offer based on recent sales of similar homes, the condition of the house and what you can afford.
Always ask the seller for a home warranty as part of your initial offer. That way, you’ll be covered if appliances or mechanicals fail or break down after you’re in the home.
Set your offer apart from the competition by including a letter to the seller, or offer the seller the ability to rent back their home for some period of time after closing. This can be your chance to connect beyond just dollars. Talk to your agent about other ways to make your offer resonate.
• Prepare to negotiate. Be prepared for counteroffers. The two things most likely to be negotiated are the selling price and closing date. Given that, you’ll be glad you did your homework first to understand how much you can afford. Your agent will aid the negotiation process, giving you guidance on the counteroffer and making sure that the agreed-to contract terms are met.
• Get a home inspection. Once you’ve signed the purchase contract, always get an independent home inspection so you know the true condition of the home. If the inspection uncovers undisclosed problems you can typically re-negotiate the terms or cancel the contract.
More tips, insights and homebuying resources can be found by visiting myhome.freddiemac.com.
While house hunting is fun, homebuying should not be taken lightly. For best results, get prepared. Smart strategies can help you make a successful offer on a property.